The Fed has completely painted itself into a corner at this point. We've seen over a decade of extremely easy monetary policy since the housing crash, zero percent interest rates (free money at the top), quantitative easing propping up markets, six trillion created to paper over the pandemic, which has artificially inflated all markets... i.e. 8.6% reported inflation, with many markets topping 20% year over year inflation. This is straight-up napalm for the lower and middle class, the 60% of Americans with no assets living paycheck to paycheck. Remember 70% of our economy is consumer spending.
While the Fed jawbones about having a mandate to preserve a 2% inflation rate and secondary goal of keeping unemployment low, its actual main purpose is to protect the value of the dollar and its status as world reserve currency. The US enjoys enormous privilege from it. When push comes to shove, they absolutely have to get inflation under control, hyperinflation is more dangerous to a nation than deflation, stagflation, recession or depression.
Armchair economist tea-leaf reading mode: Barring actual inter-bank liquidity markets gumming up, the printers aren't going to be turned back on for a long while. I think over the next year or two markets (people) are going to be surprised just how high the Fed could raise interest rates to get inflation under control, 15-20%+ isn't off the table if needed, we did it in the 1980's. It would (temporarily) decimate the stock markets, and all high-risk sectors like crypto, drive the S&P500 down into the 2,000's, but hey, that's a buying opportunity if you have the cash lying around. (Just don't lose your job.)
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